The Lok Sabha re-assembled after Lunch at ten minutes
past Fourteen of the Clock.
(Mr. Deputy-Speaker in the Chair)
SHRI S. JAIPAL REDDY (MIRYALGUDA): Sir, I call the attention of the Minister of Power to the following matter or urgent public importance and request that he may make a statement thereon:
"The situation arising out of sale of entire share of National Hydel Power Corporation to National Thermal Power Corporation and steps taken by the Government in regard thereto."
THE MINISTER OF POWER (SHRI P.R. KUMARAMANGALAM): Mr. Deputy-Speaker Sir, in the last 50 years, despite impressive growth of electricity sector from 1300 MW to 95,000 MW....
SHRI S. JAIPAL REDDY : Sir, I would like to make a point.
We table notices for Calling Attention Motion so that we can get specific replies to the specific Motion. You may kindly go through the reply. The reply does not refer to the Calling Attention Motion at all. Such an evasive reply has never been seen in the history of Parliament.
MR. DEPUTY-SPEAKER: You can make your point when you raise your question. Now let him make his statement.
SHRI S. JAIPAL REDDY : I have gone through the statement. He was good enough to have circulated his statement to us...(Interruptions)
SHRI BASU DEB ACHARIA (BANKURA): Sir, you go through the Motion and the statement of the Minister.
MR. DEPUTY-SPEAKER: Shri Acharia, let him complete his statement and then both of you can go on to form your questions. You may bring these points at that time.
SHRI BASU DEB ACHARIA : But we seek your protection.
SHRI S. JAIPAL REDDY : You look at the nature of the reply.
SHRI BASU DEB ACHARIA (BANKURA): Members have the right to get a correct and categorical reply from the Minister.
SHRI P.R. KUMARAMANGALAM: It is categorical.
SHRI BASU DEB ACHARIA : He has not mentioned anything about the Calling Motion at all.
MR. DEPUTY-SPEAKER: Shri Acharia, let him make his statement.
SHRI S. JAIPAL REDDY : Sir, we wanted to know as to whether NTPC has taken over the entire share of NHPC or not...(Interruptions)
MR. DEPUTY-SPEAKER: Let him make his statement as per the rules.
SHRI S. JAIPAL REDDY : The statement relates to the power situation in the country.
MR. DEPUTY-SPEAKER: Shri Jaipal Reddy, let him make his statement. After his statement, you can raise your point. You have got every right to raise it.
SHRI S. JAIPAL REDDY : You are right about the procedure part....(Interruptions)
SHRI BASU DEB ACHARIA : He is allowed to make a statement outside the House...(Interruptions)
MR. DEPUTY-SPEAKER: He is making a statement inside the House now.
SHRI P.R. KUMARAMANGALAM: Sir, I think it will be appropriate to respond now. The notice deals with a situation which has not arisen and I had pointed it out to the hon. Speaker saying that the situation has not arisen. The notice says "the situation arising out of sale of entire share of National Hydel Power Corporation to National Thermal Power Corporation and steps taken by the Government in regard thereto". I said that the situation has not arisen and requested the Speaker to therefore take into consideration the facts placed before him. In his wisdom, the hon. Speaker decided to admit this Calling Attention Motion. Now, there is no sale which has taken place nor has a decision been taken to make a sale.
SHRI S. JAIPAL REDDY : But you have not said that.
SHRI P.R. KUMARAMANGALAM: But certain background situation exists. Since it has come up before the House, I have set out the whole background situation and said that it is this which, I am sure, the hon. Members were referring to. I do not see anything wrong in that. That is the best that I can do.
SHRI BASU DEB ACHARIA : Except that, you have said everything...(Interruptions)
MR. DEPUTY-SPEAKER: No running commentary please.
SHRI P.R. KUMARAMANGALAM: Sir, in the last 50 years, despite impressive growth of electricity sector from 1300 MW to 95000 MW, shortages continue to persist. The energy shortage and peaking deficit presently is 4.8 per cent and 13 per cent respectively. Despite opening up of the power sector for investment by private sector in the year 1991, due to poor financial health of State Electricity Boards (SEBs), limited escrow space available, SEBs have not been able to sign PPAs resulting in non-achievement of financial closure. This has resulted in shortfall in capacity addition by the private sector. In the Eighth Plan, as against the target of 30538 MW, the achievement was only 16422 MW. Against a target of 40245 MW during the Ninth Plan, the capacity addition estimated to be realised is 28097 MW.
The Central Electricity Authority (CEA) has in the Perspective Plan for Power Development prepared with the objective of meeting a peak demand of 1,76,647 MW by 2012 has estimated the requirement of a cumulative installed capacity of 2,40,000 MW. In order to meet power on demand by 2012, the CEA has estimated that the generation capacity should be augmented by at least 1,27,806 MW during the X and the XI Plans, of which hydel capacity addition is likely to be 38,973 MW. However, this would result in hydel : thermal mix of 28:72 and poor utilisation of some thermal plants which would be running due to this situation at 3 to 15 per cent PLF. In order to improve hydel:thermal mix, to a ratio of at least 34:66, which would lead to better utilisation of thermal power plants and stable frequency regime, it would be necessary to augment the hydel capacity addition to 51,600 MW during the X and the XI Plans.
In order to implement a Power Development Programme (PDP) involving a capacity addition of 1.28 lakh MW during the X and the XI Plans and associated transmission and distribution systems, the requirement of funds would be of the order of Rs.11 lakh crore. The Ninth Plan has provided for a Plan Outlay of Rs.1.25 lakh crore, of which the Central Sector Outlay is Rs.53,299 crore and State Sector Outlay is Rs.71,227 crore. It would, therefore, be seen that the resources likely to be made available in the X and the XI Plans would be of the order of Rs.2.5 lakh crore and would have to be substantially augmented to a level of around Rs.11 lakh crore by mobilising resources. The various options that could be considered jointly and severally are:
Higher Plan Allocation;
Levy of Cess on Power Generation;
Upward revision of tariff;
Securitisation to enable CPSUs to realise their dues from the State Electricity Boards;
Implementation of Power Sector Reforms;
Greater Involvement of the Private Sector in Generation, Transmission and Distribution; and,
Financial Engineering like acquisition, amalgamations/mergers and/or Disinvestment.
In order to enable Government to implement a massive Power Development Programme including improvement in the Hydel-Thermal mix by 2012 so that power could be made available on demand, it would be necessary to explore several options. In this context, NTPC has appointed M/s. ICICI to analyse various options for financial engineering and disinvestment in the Central Power Sector Undertakings. The final report of the ICICI is awaited.
I would request hon. Members of this hon. House to suggest the feasibility of pursuing the various options so that the Government could pursue an accelerated Power Development Programme and also improve the Hydel-Thermal mix that is so necessary during the time-frame upto 2012.
I am making available some data to the Members in support of the statement as annexures.
Sir, before I take the seat with your permission, if I may state that actually what, I believe, should have been the basis for the hon. Members to raise this Calling Attention is that I had, in a particular Seminar/Conference in Bombay when I addressed how do I plan to address the resources for achieving a target of Power on Demand by 2012, said various options are there. One of the options is to do an acquisition, amalgamation and merger between the two major Public Sector Undertakings, the NTPC and the NHPC, for the purpose of leveraging their strengths to raise greater resources. I said this is one of the options. It is one of these options which has been indicated very clearly by the term "financial engineering" like acquisition, amalgamation, merger and/or disinvestment.
Even there, I had also said another thing which I must say here and that is, one other option which was given was disinvestment of shares of the NTPC or, maybe, creating subsidiaries, carving out a few power stations in terms of subsidiary share sales. But all these are under the consideration of the ICICI. We are awaiting their recommendations. But since this House is now seized of the matter, I would not like to lose this opportunity of getting appropriate advice from the Members before the Government takes a final decision in the matter.
SHRI S. JAIPAL REDDY (MIRYALGUDA): Mr. Deputy-Speaker, Sir, at the outset, I would like to, once again, record my strong protest against the totally diversionary reply. There is a design in this diversionary reply. I do not accuse Shri Kumaramangalam of incompetence. Therefore, I would not like to think that he gave the reply inadvertently.
Sir, our Minister has developed a technique, and deliberately, of speaking first and seeming to think later, He thinks first, then speaks, to check out and prepare the mind of people for the shock he is going to administer. He made a proposal first at one business meeting that he was thinking of hiving off some NTPC units in favour of the private entrepreneurs. Later, even before people could absorb the proposal, he was so febrile in his imagination that he came forward with another proposal at another business meeting that the whole of NHPC could be taken over by the NTPC with a number of wonderful, multiple objectives. One was, of course, that he was more bothered about the fiscal deficit than poor Yashwant Sinha who was not in the know of it, to the best of my knowledge. He said that the NHPC would be taken over by the NTPC for Rs.4,500 crore.
SHRI P.R. KUMARAMANGALAM: That is the value of the equity.
SHRI S. JAIPAL REDDY : Whatever be the basis of the figure, he mentioned it and he also said that in the first year Rs.2,500 crore would be made available from NTPC and in the second year the remaining amount of Rs.2,000 crore would be made available. There is an element of deliberate casualness in all these things. I am afraid, I do not like to believe this, there is a cynical pattern in this persistent casualness.
SHRI P.R. KUMARAMANGALAM: Very neatly bordering on non-offensive statements!
MR. DEPUTY-SPEAKER: Even the Minister cannot interrupt.
SHRI S. JAIPAL REDDY : Sir, what is the position of the NHPC and NTPC? Both are scheduled public sector undertakings. The Minister, with his tongue firmly planted in the cheek, has always been talking of autonomy of these PSUs. When he made this proposal, the NHPC and NTPC were totally in the dark. They reacted with loud shock; they reacted against this.
The NHPC was not willing to be bought. The NTPC was not willing to buy. And the Minister made a statement.
What is the value of NHPC? According to my information, the book value of NHPC is Rs. 10,650 crore. The market value of NHPC is Rs. 20,000 crore. NHPC is a profit-making and dividend-paying company. In fact, the credibility of NHPC is so high not only in the national market but also in the international market that a Canadian finance company gave a loan of Canadian $ 189 million which roughly amount to RRs. 500 crore at 13 per cent rate of interest without any collateral securities.
Now, Shri Kumaramanglam would like to make a distress sale. He will say, "To whom am I selling? I am selling to another public sector undertaking." Except that, both of them produce power, there is nothing in common between NTPC and NHPC. Both of them have turbines. That is the reason why perhaps our Minister seems to think that both of them are all right. They do not mesh well. The technology involved is totally different. They are two different kettles of fish. Nobody can say that this is a wonderful example of core competence.
Now, why is NTPC not willing to buy? It is because NTPC is again a profit-making company. It is a dividend-paying company. It does not want to get mixed up in an area to which it is a stranger. NTPC has reserves of only Rs. 2,500 crore. NTPC requires this amount very badly. The installed capacity needs to be augmented appears to be the burden of Minister's long boring song which he presented in the form of a statement but, that purpose wouldnot be served. If Rs.2,500 crore reserves are taken away by Shri Yashwant Sinha due to the grace of Shri Kumaramangalam, NTPC will be cash-strapped. NTPC will be left with only power bonds worth Rs. 3,500 crore and they will have to be sold at a discounted value. So, NTPC is afraid of being reduced to bankruptcy. As it is, NTPC from another level - at the macro angle - is facing a financial crisis. More than Rs. 13,800 crore are owed to the NTPC by various SEBs in the country. They are doing nothing to get them collected. The same is the case with NHPC. More than Rs. 3,000 crore are owed to NHPC by various SEBs in the country. They are doing nothing. Nobody - not even Shri Kumaramangalam - can say that NHPC and NTPC have not been doing well. May I point out that the Disinvestment Commission headed by Shri G.V. Ramakrishna made a report that NHPC and NTPC should not be allowed to disinvest because they are in the core sector? What it suggested was that it could think of strategic tie-ups. Shri Kumaramanglam, who is, of course, a financial wizard in his own right, in total defiance of this recommendation of the Disinvestment Commission is thinking of disinvesting the stock of NTPC.
Our Governments, I would say all Governments -- the Congress Government, the UF Government and this Government -- have been setting a lot of store by the independent power producers. How much could they produce during the last 7-8 years? Hardly 1500 m.w. of power. In anticipation of the great potential of IPPs, the NTPC and NHPC were not allowed to produce anything at all. As a consequence of this, in 1997 and 1998 calender years, there was zero addition. But later we realised that the IPPs were not able to rise to the occasion, were not able to accept the challenge. We , therefore, had to fall back upon the NTPC. With the result in 1999, in one calender year, we added 1556 m.w. of power. I have mentioned all this to show how casually the hon. Minister is going about on this serious issue.
Now, let me refer to the ridiculous nature of the proposal about which the hon. Minister wanted to be educated. The Minister said that he wanted to be educated. I do not mind that.
MR. DEPUTY-SPEAKER: You have to come to the question now.
SHRI S. JAIPAL REDDY : I am coming. I think, in the presentation I am asking questions are inherent.
Sir, for the first time in India the President of India, who owns the shares of NHPC, will sell all its shares to himself because he is also the owner of NTPC. NTPC parts with its reserves worth Rs.2500 crore. Then, the NTPC will face financial difficulties. The President of India will ask the Finance Minister to support NTPC through budgetary allocation. Can there be a more ridiculous, preposterous arrangement than this, Sir?
We told the Government last year that cross holding last year was absolutely wrong. We would say that this sort of arrangement is doubly wrong. This is not the way to reduce our fiscal deficit which is actually to exceed Rs.1 lakh crore. I would request the hon. Minister, for that elusive objective not to kill these two organisations.
Now, I would like to refer to the dangerous implications of the seemingly innocuous proposal. With one `friendly' blow, both the organisations, that is, NTPC and NHPC, would be grievously wounded. According to the press reports, Korba and Vindyachal, which are highly profit-making power houses are on sale. That is what the press has speci;ated. The hon. Minister should kindly deny it.
SHRI BASU DEB ACHARIA : He has not denied it.
SHRI P.R. KUMARAMANGALAM: No.
SHRI S. JAIPAL REDDY : And he wants to encourage private investment. I am not, per se, opposed to private investment in power sector. From the days of Enron to the days of Hindujas, I have not been opposed to it and per se. But I am only opposed to the opaque manner in which he encourages and organises disinvestment private involvement.
Take the examples of Vizag project, NTPC setting up Simadri project. It is able to genrate power at Rs.4.80 crore, where as the projected cost of the Hindujas project is Rs. 5.74 crore.
There is a difference of 40 per cent in the price. Both are thermal stations. Both are located in Vizag. Both are being set up at the same time ... (Interruptions)
MAJ. GEN. (RETD.) B.C. KHANDURI (GARHWAL): Mr. Deputy-Speaker, Sir, I have a point of order.
MR. DEPUTY-SPEAKER: What is your point of order?
MAJ. GEN. (RETD.) B.C. KHANDURI : Sir, under rule 192, I would like to know whether the hon. Speaker has fixed any time-limit for these speeches.
SHRI SOMNATH CHATTERJEE (BOLPUR): On an informal point you are asking a question. ... (Interruptions) Shri Jaipal Reddy, you exercise your self restraint and you finish when you have completed.
MAJ. GEN. (RETD.) B.C. KHANDURI : You are giving the ruling on behalf of the Deputy-Speaker.
SHRI SOMNATH CHATTERJEE (BOLPUR): He is my very valued colleague. ... (Interruptions)
MR. DEPUTY-SPEAKER: Shri Jaipal Reddy, please wind up.
SHRI S. JAIPAL REDDY : Okay Sir, I take the hint from the hon. Member and the Chair and I will try to wind up.
The Minister has cleverly set up Power Trading Corporation and that Power Trading Corporation will buy power from the mega power projects which are being permitted zero import duty. That Power Trading Corporation will get guarantees from the Government of India. In other words, the power to be produced by mega power projects will once again get sovereign guarantees, will once again get counter guarantees (Interruptions)
MR. DEPUTY-SPEAKER: Shri Jaipal Reddy, you will have to coin your question now.